Vital cog in State's industrial wheel

Kochi was for long home to Kerala’s engines of growth - its path-breaking PSUs and big private enterprises. The Hindu, in a series of stories, celebrates the old generation industrial units of Kochi to review their performance and report their challenges and plans for the future.

When the integrated expansion project at Bharat Petroleum Corporation’s Kochi Refinery is completed in 2015, it will become one of the most important landmarks in Kerala’s industrial growth story. The project will be a milestone as significant as the commissioning of the refinery in September 1966, when Kochi became the first oil refining centre in South India. The then standalone refinery was among the four public sector facilities set up in the country under a massive national programme.

However, the commissioning of the expanded 15.5-million-tonnes-a-year facility will make the Kochi facility more than a refinery. It will ring in a new era of industrialisation in the State, whose relationship with the brick and mortar industry appears to have soured long ago.

Pet coke from the expanded refinery will change the power generation scenario in the State. LPG from the plant will be more than what Kerala requires and propylene from the refinery will set the ball rolling for a new industrial revival in the State. Kerala will finally have its own petrochemical complex, thanks to the BPCL initiative to set it up in collaboration with LG Chem.

The refinery’s executive director Prasad K. Panicker said the combined Rs.20,000 crore, which would go into the expansion project and petrochemical complex, would be the single largest investment in the State’s history. Among the ongoing projects, only the Kochi metro rail project with an envisaged investment of approximately Rs.5,000 crore comes anywhere close to the two projects in terms of the volume and potential for job generation.

The refinery’s commissioning in 1966 required 5,000 hands at the peak of the works. The present works require between 15,000 and 20,000 people a day over the next two-and-a-half years. It may not be easy to find so many workers, concedes Mr. Panicker.

The short-term job opportunities apart, the petrochemical complex holds the key to the future. More than any other product, it will be propylene that will make Kochi Refinery’s venture a futuristic one. Out of a total of five lakh tonnes of propylene from the expanded refinery, three lakh tonnes will be used up by the joint venture company for derivatives. The rest will be available to any entity interested in using it.

A score of downstream units are expected to create at least 10,000 jobs in the State. The Kerala State Industrial Development Corporation is already in the thick of action. It is on the look out for entities interested in exploiting the new opportunity. However, with land prices rising in and around the vicinity of the refinery, the corporation is finding it a bit difficult to acquire sufficient land. According to industry insiders, the downstream units will require approximately 100 acres. For the downstream units to be viable, it would be best that the government agency identify and acquire land.

Looking beyond the hurdles, the petrochemical complex will ensure more business for the Port of Kochi, create new opportunities for Fertilizers and Chemicals Travancore and augment business for the State-owned Travancore Cochin Chemicals.

The quantum of propylene from the expanded refinery will result in production of nine lakh tonnes of petrochemical derivatives that include acrylates, super absorbent polymer and phenol. The end products form these derivatives include textiles, adhesives, diapers, paints and inks, caprolactam and agro-chemicals. Downstream units producing these products will require an investment of Rs.6,000 crore.

Transporting the petrochemical derivatives from Kochi via the sea route would help generate more business for the port here. The demand for sulphuric acid from the downstream units will generate new customers for the Fertilizers and Chemicals Travancore Limited (FACT). Travancore Cochin Chemicals will see increased demand for caustic soda, one of its key products.

The sophistication of the expanded refinery will enable the oil company refine even sulphur-heavy crude as well derive an entirely new product — petroleum coke, which is now imported into the country. The new product can go into cement production as well as generation of electricity.

In view of this, the Kerala State Electricity Board and BPCL have entered into an agreement to set up a power generation facility with a capacity of around 350 MW. Power produced from the plant is expected to be considerably cheaper that what is now being bought by the Board from outside.

The completion of the refinery expansion also means that the State will have surplus LPG available in Kochi itself. Kerala requires between 60 and 65,000 tonnes of LPG a month while the expanded refinery will produce more than a million tonnes a year from the current level of five lakh tonnes.

BPCL has also finalised plans and is awaiting clearance for a 220-km pipeline to supply LPG from Kochi to bottling plants up to Coimbatore.